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Chapter 6 Patterns of Technological Innovation in Muar Wooden Furniture Industry: Learning, Linkages and Institutions

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Chapter 6 Patterns of Technological Innovation in Muar Wooden Furniture Industry: Learning, Linkages and Institutions Chapter 6 Patterns of Technological Innovation in Muar Wooden Furniture Industry: Learning, Linkages and Institutions 6.1 Introduction This chapter explores and describes the technological innovation activities amongst the SMEs in the Muar wooden furniture manufacturing cluster. The findings from the interviews with innovation actors and direct observations on the common practices in the Muar furniture industry are used to complement the innovation survey findings in Chapter 5. This chapter is divided into three parts. It begins with the introduction of the Muar District and its manufacturing activities. This is followed by an overview of the Muar furniture industry from the perspective of its emergence, structure and characteristics, and the factors that have contributed to the success of the industry. The second part of this chapter draws attention to the key elements of SIS of the Muar furniture industry, namely the technological and knowledge domain, learning and capabilities building, actors and networks, and institutions and routines. The third part will explore the factors that hamper the technological innovation efforts among the SMEs. The strategic thrusts that would contribute to the development of the industry are suggested at the end of this chapter. 193 6.2 Background of Muar District Muar District is located in the north-western of Johor state, Malaysia. It borders Malacca state to the north, Segamat District to the east and Batu Pahat District to the south. Prior to the re-delineation of Muar‘s local administrative entities in 2001, the administration of Muar District was divided into two administrative councils – the Northern Muar District Council, and Southern Muar District Council. Both these councils are at the third level of government after the Federal Government and the State Government of Johor. The Northern District Council administrative territory is commonly known as Tangkak sub-district and Tangkak is the main town and the centre of the council‘s administration. Meanwhile, the Southern Muar District Council governs the planning and development of the southern parts of Muar District. Muar town, also referred to as Bandar Maharani (or the Empress Town) is the most important commercial and administrative centre in Muar District. It is 150 kilometres southwest to the Malaysian capital Kuala Lumpur, and 180 kilometres north-west of Singapore. In 2001, there was a major administrative change, and the Tangkak sub-district was upgraded into a full district of Ledang and the Tangkak District Council is the local administrative authority of Ledang District. Concurrently, the Southern Muar District Council was also upgraded to Muar Municipal Council, or Majlis Perbandaran Muar (MPM). However, both administrative districts are still collectively called Muar District by their residents. Some of the on-going state and local development plans, such as Johor State Structure Plan 2020, and Muar District Local Plan 2002-2015 still use ―Muar District‖ when referring to both the Muar and Ledang Districts. For the purpose of this research, the term ―Muar District‖ is used mainly to refer to the southern part of 194 the Muar District, which is the previous Southern Muar District Council territory. This is because most of the furniture manufacturers are located there, particularly in Pagoh, Sungai Terap, Bukit Pasir, Bukit Bakri, Parit Jamil, Parit Jawa and Parit Bakar. Presently, Muar District consists of twelve sub-districts, namely Bandar, Sungai Terap, Sungai Raya, Jalan Bakri, Parit Bakar, Parit Jawa, Seri Mananti, Sungai Balang, Ayer Hitam, Jorak, Lenga and Bukit Kepong. Ledang District consists of six sub-districts, namely Kesang, Serom, Kundang, Tangkak, Gerisek and Bukit Serampang. Figure 6:1 shows the current local administrative territories of Muar and Ledang District. The administrative territory of MPM covers 137,572 hectares and has a population of 330,355 people (MPM, 2002). The comprehensive administrative system of Muar District, as other district-level administrations in the country, is available in the Muar District Local Plan 2002-2015.39 According to MPM (2002), 70.54 percent of land-use in Muar District is for agricultural activities. Of this, 21.33 percent is for rubber plantations, which is the main source of wood for the Muar furniture industry. Only 0.34 percent of the land is used for industrial activities. However, this figure doesn‘t capture the true picture of the land-use for industrial activities because most of the firms, especially the small and micro-sized enterprises are operating on the agricultural and residential land. The details of industrial activities in Muar District will be discussed in the next section. 39 In general, the administration system of Malaysia‘s spatial and physical is three-tiered, consisting of the federal government, the state governments, and local authorities (such as city, municipal, and district councils). At the national level, the National Physical Plan, or Rancangan Fizikal Negera (RFN) is prepared by the Town and Country Planning Department based on the requirement of the Town and Country Planning Act 1976 (A1129). It contains a written statement formulating strategic policies in determining the general directions and trends of the physical development of the country and to be accompanied by indicative plans. At the state level, the State Structure Plan, or Rancangan Struktur Negeri (RSN) is prepared by the State Department of Town and Country Planning to set out the policies and proposals for the development and use of the land in a state based on policies and directions stated in RFN. The local authorities prepare the District Local Plan, or Rancangan Tempatan (RT). RT controls the development at the local level and details the land use plan that incorporates the national as well as the state development policy. 195 Figure 6:1 The administrative territories of Muar District and Ledang District TANGKAK BUKIT SERAMPANG LEDANG DISTRICT BUKIT KEPONG GERISEK Segamat Mersing KUNDANG SEROM LENGA Muar Kluang MUAR DISTRICT Batu Pahat Kota JORAK KESANG Tinggi S. RAYA Johor JALAN Peninsular Malaysia S. TERAP BAKRI Pontian Bahru AYER BANDAR HITAM PARIT PARIT BAKAR JAWA State of Johor SERI MENANTI SUNGAI BALANG Source: Author’s compilation 196 6.3 Manufacturing activities in Muar District According to JPBD (2007), there were 2,768 manufacturing establishments in the state of Johor in the year 2000. Of these, about 10 percent are in Muar District. Most the establishments in Johor are involved in metal and machinery fabrication (27.6 percent). Wooden products and furniture establishments are ranked third (14.1 percent) after the chemical, petroleum, and rubber or plastic products (20.1 percent). Table 6:1 shows the distribution of manufacturing industries in Johor for the year 2000. Table 6:1 Distribution of manufacturing industries in the state of Johor, 2000 Number of Establishment District metallic metallic - Food & beverage Food & & clothing Textile & products Wooden furniture printing & Paper Chemical, / rubber petroleum, products plastic Non minerals Metals & machinery Metal fabrication Others Total Percent Johor 142 130 137 159 444 53 72 557 130 1,824 65.8 Bahru Pontian 12 7 10 - 8 3 1 25 4 70 2.5 Batu Pahat 30 98 51 17 45 11 2 43 18 315 11.4 Muar 12 18 137 10 28 6 - 60 6 277 10.0 Segamat 5 5 14 3 6 4 - 19 1 57 2.1 Kluang 16 34 25 7 20 20 1 50 4 177 6.4 Kota 2 1 13 2 5 5 - 7 - 35 1.3 Tinggi Mersing 5 1 2 - 1 - - 3 1 13 0.5 Total 224 294 389 198 557 102 76 764 164 2,768 100.0 Percent 8.1 10.6 14.1 7.2 20.1 3.7 2.7 27.6 5.9 100.0 Source: JPBD (2007) 197 According to the Muar District Local Plan 2002-2015, the existing industrial zones are sufficient to cater for the projected industrial demand till year 2015. Hence, there is no plan to establish any new industrial zones at the moment, but there are plans to reallocate industrial establishments that are not on industrial land, that is, the illegal factories, into the industrial zones.40 Table 6:2 lists the industrial activities in Muar District and its location whereas Figure 6:2 shows the main industrial estates in Muar District, namely Tangkak, Tanjung Agas, Jorak, Parit Jamil, Pagoh, Bukit Bakri, and Grisek. Table 6:2 Types of industrial activities in Muar District and its location Types of Industrial Zone Main Activities and Location Furniture and mixed industrial zone Formalised industrial area of Pagoh, Bukit Pasir, Simpang Jeram and Parit Jamil Core product is furniture Focuses on furniture, mixed, textile etc Furniture support and mixed Formalised industrial area of Sg. Terap and Gerisek industrial zone Focuses on furniture support and mixed industry Textile industrial zone Tangkak Industrial Area and Sagil Industrial Area Focus on textile and apparel industry Electronic engineering, metal and Tanjung Agas Industrial Area food industrial zone Focus on electronic engineering, metal, chemical products, rubber and food Small and medium industrial zone Parit Bakar, Parit Jawa, Kesang, Serom and Semerah Focus on food , furniture cluster support, craft industries and workshops Source: MPM (2002) 40 However, this contradicts the feedback obtained from the industry practitioners. According to them, there is currently a shortage of industrial land in Muar District. See Section 6.6 for a more detailed discussion. 198 Figure 6:2 shows the location of the main industrial estates in Muar District and its key activities. The industrial estates in Muar can be classified into four zones, namely furniture zones, textile zones, electronic engineering, metal and food zones, and SMEs zones (MPM, 2002). The Muar furniture industry is concentrated around the furniture and furniture support industrial zones, which span across the formalised industrial area of Pagoh, Bukit Pasir, Simpang Jeram, Parit Jamil, Sungai Terap and Gerisek.
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